Smiths News - Edison Group

Overview
Price performance
Financials
Research
Thematics

Smiths News is the UK’s largest newspaper and magazine distributor with a c 55% market share covering 24,000 retailers in England and Wales. It has a range of long-term exclusive distribution contracts with major publishers, supplying a mix of supermarkets and independent retailers.

Volumes of newspaper and magazine sales have been falling at an average rate of c 5% pa for many years as first TV and radio and then online have taken over as the primary source of news consumption by an increasingly younger audience. Cover price inflation has partially offset lost revenue, but Smiths News has had to, and continues to, cut costs repeatedly to make up the shortfall. These characteristics are likely to persist into the future, but Smiths is developing new revenue streams to offset these pressures.

Latest Insights

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Industrials |
Update

18.11.24

Smiths News — Growth potential and a double-digit yield

Industrials |
Flash note

05.11.24

Smiths News — FY24 trading good, special dividend proposed

Industrials |
Update

20.05.24

Smiths News — Refinancing releases dividend shackles

Industrials |
Flash note

31.01.24

Smiths News — On track to meet guidance

Sector

Industrials

Equity Analyst

Andy Murphy

Director, Financials & Industrials

Key Management

David Blackwood

Chairman
George Cooper

Head of corporate and finance
Jonathan Bunting

CEO
Paul Baker

CFO

Balance Sheet

Forecast net debt (£m)

6

Forecast gearing ratio (%)

250

Share Price Performance

Price Performance
%	1M	3M	12M
Actual	3.7	5.5	33.0
Relative	7.4	8.2	23.1
52 week high/low	65.6p/46.0p

Financials

Smiths News now has contracts in place for 91% of its core revenue to 2029, implying resilience. In addition, its non-core growth activities are beginning to gather momentum, which is already mitigating the structural decline of the core activity. Furthermore, the addressable non-core ‘early morning’ market is sizable and has a profit opportunity of c £160m, which implies that there is potential to more than offset the decline seen in the core operations and could lead to long-term profit growth. This in turn underpins the cash generation and the dividends, and could see further distributions if investment for growth is not required. We have trimmed our forecasts but raise our valuation to 93p/share.

Y/E Aug	Revenue (£m)	EBITDA (£m)	PBT (£m)	EPS (fd) (p)	P/E (x)	P/CF (x)
2023A	1091.9	42.7	33.4	10.68	5.7	3.4
2024A	1103.7	42.6	34.1	10.16	6.0	3.4
2025E	1037.5	40.9	33.9	10.49	5.8	3.6
2026E	1006.4	40.0	33.8	10.46	5.8	3.7

Research

Update

Industrials

24.11.22

Smiths News — Better FY22 than expected; 10% dividend yield

Update

Industrials

26.09.22

Smiths News — Sub 3x P/E and a 15% dividend yield

Industrials

edison tv

Smiths News – executive interview

edison tv

Industrials

17.11.21

Smiths News – ETV: Cash flow begins to open up future options

Update

Industrials

08.11.21

Smiths News — Strong results, debt falling rapidly

Initiation

Industrials

18.10.21

Smiths News — Predictable cash flows and growing dividends

edison tv

Industrials

26.07.21

Smiths News – Disconnecting from the past and embracing an exciting future

QuickView

Industrials

13.07.21

Smiths News — 43-week trading update implies upgrades

QuickView

Industrials

21.06.21

Smiths News — Interim dividend declared; yield attractions

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